HHI.L WACC - Weighted Average Cost of Capital

The WACC of Henderson High Income Trust PLC (HHI.L) is 10.0%.

The Cost of Equity of Henderson High Income Trust PLC (HHI.L) is 11.25%.

The Cost of Debt of Henderson High Income Trust PLC (HHI.L) is 4.70%.

	Range	Selected
Cost of equity	9.60% - 12.90%	11.25%
Tax rate	0.60% - 0.70%	0.65%
Cost of debt	4.30% - 5.10%	4.70%
WACC	8.6% - 11.4%	10.0%

WACC

HHI.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.93	1.13

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.60%	12.90%

Tax rate	0.60%	0.70%
Debt/Equity ratio	0.23	0.23
Cost of debt	4.30%	5.10%

After-tax WACC	8.6%	11.4%


Selected WACC	10.0%

HHI.L's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for HHI.L:

cost_of_equity (11.25%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.93) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.